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BP (NYSE:BP) shares have been bumping along near two-year lows this month, which may put pressure on new CEO Murray Auchincloss to retreat from a strategy of shifting away from oil and gas, Bloomberg reported Thursday.
BP (BP) “pivoted hard toward the energy transition under Bernard Looney around the time of maximum interest in green energy solutions and very low interest rates,” Berenberg analyst Henry Tarr told Bloomberg, but commodity prices have since recovered, “making the legacy upstream business seem more attractive, while higher interest rates and more competition has left some low-carbon businesses looking less attractive.”
The stock fell as much as 1.4% in London trading on Thursday to 424.55 pence, the lowest since September 2022, and shares have slumped 11% in London during the past year while British peer Shell (SHEL) has gained more than 14%.
BP’s (BP) weakness contrasts with Shell (SHEL), which also set a goal under previous leadership to diversify away from fossil fuels, but under current CEO Wael Sawan, who took over the top job in early 2023, the company has focused on delivering returns for shareholders and has pulled back on its plans to cut carbon emissions and invest in renewable power generation.
While BP (BP) has maintained its pace of stock buybacks this year, investors may start worrying about how long it can continue doing so, according to Bloomberg Intelligence analyst Will Hares.
“Compared to its number one peer, Shell, there’s an increasing concern of sustainability of returns” at BP (BP), Hares said.
